Archive for the 'For Buyers' Category
Expecting A Better Chicago Economy In 2012? Think Again
January 6th, 2012 categories: Chicago Info/News, Chicago Neighborhoods, Chicago News, Chicago Real Estate News, Economic Recovery, For Buyers, For Homeowners, For Sellers
Crain’s Chicago Business gave Chicago residents hoping for a better economic year in 2012 little reason for optimism. According to Crain’s, the Chicago economy will improve in 2012, but at a slower-than-optimal rate.
Crain’s quoted numbers from Moody’s Analytics saying that the Chicago-area economy should grow by about 1.6 percent in the first half of 2012 and by about 2 percent for the full year. These numbers sound positive until you consider that six months ago Moody’s predicted that the Chicago-area economy would grow by about 4 percent in 2012.
Crain’s points to the economic uncertainty caused by unstable financial markets and European debt worries. This, the story says, has made employers overly cautious when making new job hires.
Because of this, Moody’s is predicting that the unemployment rate in the Chicago area will jump to 11.4 percent in the first half of 2012. That’s up from 10.6 percent in the second half of 2011. Six months ago, Moody’s predicted that the Chicago-area unemployment rate would stand at 9.2 percent in the first half of 2012.
This is bad news, too, for the Chicago housing market. Buyers won’t be as willing to invest in a new home if they’re still worried about losing their jobs. And as Moody’s numbers show, Chicagoans have little reason to be optimistic about the safety of their jobs.
Just because a new year has started, it doesn’t mean that Chicago, and the rest of the nation, don’t still face serious challenges. Until unemployment finally falls, expect the Chicago housing market to struggle.
This latest news points out once again how important it is for home sellers to work with a skilled REALTOR® to set the right price for their condominiums or single-family homes. Buyers today are smart; they won’t overpay for a home. Those sellers who do set an unrealistic asking price will see their residence sit on the market for months, ignored by today’s savvy home buyers.
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Some Tips For Chicagoans Relying On Gifts To Cover Their Down Payments
December 21st, 2011 categories: FSBO's, For Buyers, For Homeowners
The days of mortgage lenders offering home loans with no down payment requirements are long gone. Today, buyers financing their homes must come up with down payments.
It’s little surprise, then, that many buyers — especially first-time buyers — are getting help from family members or friends to cover their down payment requirements.
A story by the Wall Street Journal reported that 27 percent of first-time buyers in 2010 received a financial gift from a friend or family member to use toward their down payments. That figure is up from 22 percent in 2009 and 23 percent in 2005, according to numbers from the National Association of REALTORS®.
The Wall Street Journal story quoted a mortgage adviser from Chicago who explained that a 10 percent down payment on a modest Chicago condominium or single-family home could come to $30,000 to $40,000. That’s a lot of money for first-time home buyers to scrape together.
Of course, there are options for buyers seeking lower down payments. Buyers with solid credit can qualify for FHA mortgage loans that come with down payment requirements of just 3.5 percent.
Those working with traditional mortgage loans, though, will often have to make a down payment of 10 percent to 20 percent of a home’s purchase price. Again, in big cities such as Chicago, that’s hardly a small sum of money.
The Wall Street Journal story provided some good advice for buyers who are relying partly on gifts to finance their down payment. Freddie Mac requires buyers to provide at closing funds equal to at least 5 percent of the home’s purchase price if the loan-to-value ratio is greater than 80 percent and a relative or friend provides a gift to help with the cost of the down payment.
The Journal story also says that buyers must properly document their down payment gifts. For instance, if a buyer’s bank account suddenly jumps from $10,000 to $15,000 thanks to a gift from a family member, the loan officer handling the loan will want to see a gift letter. This letter should provide the giver’s name, address and telephone number. The Journal also reported that the letter should spell out the relationship between the buyer and the person providing the gift.
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Contingency Offers Making A Comeback In Chicago?
December 16th, 2011 categories: Chicago Real Estate News, For Buyers, For Sellers
Selling a home and buying one at the same time has never been an easy task. Ideally, homeowners want to sell their existing homes, close on a new home and move directly from one residence to the next.
The timing of all this can be difficult. Often, sellers have to take a chance: Do they buy their dream home today even though they’re still trying to sell their Chicago condo? Or do they wait to sell their existing home before buying a new place to live? Both options come with challenges: Homeowners who buy a home before they sell their current residence might end up having to make two mortgage payments a month as they struggle to sell their existing homes, especially in today’s challenging Chicago housing market.
And those buyers who go the other route might find themselves without a place to live once they’ve closed on the sale of their existing home.
The Chicago Tribune, though, recently outlined the growing popularity of an alternative, the contingency sale.
In a contingency offer, homebuyers get a set period of time — the Tribune says it’s usually from 30 to 60 days — to sell their homes before the deal on their new home closes. If buyers don’t sell their properties during this time period, the deal evaporates.
During the contingency period, if another buyer makes a better offer on the new home, the owners of that residence can accept it. In most cases, the first buyers have a short period of time — often one or two days — to remove the contingency on their offer and purchase the home outright. If buyers don’t take this opportunity, the new buyers are free to purchase the home.
Contingency offers come with risks for both sides. Buyers, of course, might lose the home they want because a better offer comes in. Sellers might see their purchase offer evaporate if their buyers find that they can’t sell their existing residences. And when a home has a contingency offer on it, it generally attracts fewer potential buyers.
In brisk real estate markets, most sellers won’t accept contingency offers. In Chicago during the real estate boom, sellers rarely took on such offers. Today, though, sellers are more willing to consider this alternative as single-family homes and condominiums sit on the market for months.
Buyers and sellers, though, need to discuss the pros and cons of contingency offers with their real estate agents before entering into one of these agreements.
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Buying A Chicago Condo, Single-Family Home More Affordable Today
December 14th, 2011 categories: Chicago Info/News, For Buyers, Housing Market, Mortgage Info
Mortgage interest rates continue to hover near record lows. This is the best holiday present Chicago home buyers can receive: It gives their dollar more buying power as they search for city condominiums or single-family homes.
According to a recent story in the Wall Street Journal, interest rates in the United States on 30-year fixed-rate mortgage loans averaged 3.99 percent for the week that ended on Dec. 8. That’s down just a bit from the 4 percent average interest rate of one week earlier and down significantly from the rate of 4.61 percent a year earlier.
Interest rates on 15-year fixed-rate mortgage loans were even more impressive, according to data from Freddie Mac. This rate stood at 3.27 percent for the week that came to a close on Dec. 8. That’s down from 3.3 percent from a week earlier and 3.96 percent from a year ago.
The 15-year fixed-rate mortgage interest rate is also just a tick above its all-time low of 3.27 percent, which it hit in October.
This is, of course, great news for consumers interested in purchasing a Chicago condominium or single-family home. Low interest rates mean that it is less expensive for buyers to borrow money. Buyers today, then, can save hundreds of dollars a month on their mortgage loan payments compared to the days when interest rates of 6 percent or 7 percent were considered solid.
On the downside, the process of applying for a mortgage loan isn’t easy today. Buyers will need to send their mortgage lenders paperwork proving that they make enough money each month to afford their new mortgage payments. They’ll also have to produce documents showing lenders how much they pay each month in debt.
Borrowers will also have to submit to a credit check. Lenders today reserve their lowest mortgage interest rates for those borrowers who have FICO credit scores of 740 or higher.
But for those buyers willing to submit their paperwork, and who have strong credit scores, buying a single-family home or condo today is more affordable than it’s been in a long time.
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“Good” News, Bad News Regarding The Chicago Housing Market
December 6th, 2011 categories: Chicago Neighborhoods, Chicago Real Estate News, Economic Recovery, For Buyers, For Homeowners
The Chicago Tribune in late November brought both good and bad news for Chicago homeowners in the same story, covering reports showing that home prices in the Chicago area fell in September but that the number of local owners underwater on their mortgage loans also dipped.
First, the prices: According to the latest findings from the Standard & Poor’s/Case-Shiller home price index, home prices in the Chicago area dropped 0.8 percent in September when compared to August. They were also down 5 percent when compared to September of 2010.
Prices in the Chicago area today are at levels the area last saw in the spring of 2002, according to the Tribune story.
The “better” news? The Tribune also reported on the latest numbers from CoreLogic that showed that 24.9 percent of all homeowners with a mortgage in the Chicago area owed more on their loans than what their residences were worth at the end of September.
That number isn’t great. But it is better than the 25.2 percent of homeowners who were underwater on their mortgage loans at the end of the second quarter of this year.
Still, even with that slight improvement, 383,625 residences in the Chicago area were underwater on their mortgage loans at the end of September. Obviously, that number is far too high, especially considering nationally that only 22.1 percent of all residential properties with mortgage loans were underwater at the end of the same month, according to CoreLogic.
Both sets of numbers show that the housing market in Chicago, as in the rest of the nation, has a long way to go before it can be considered healthy again. The good news is for buyers: Home prices in the City, even in traditionally attractive neighborhoods such as Lakeview, Lincoln Park and Lincoln Square, remain affordable. Buyers today can find great bargains on good properties in the best locations.
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